Medexus Pharmaceuticals Q1 Earnings Call Highlights

Medexus Pharmaceuticals (TSE:MDP) reported higher first-quarter fiscal 2027 revenue and adjusted EBITDA, supported by continued growth for GRAFAPEX and a stronger contribution from IXINITY, while management maintained its full-year outlook for the recently launched transplant-conditioning product.

For the three months ended June 30, total net revenue rose to $28.6 million from $24.6 million a year earlier. Adjusted EBITDA increased to $4.7 million from $3.4 million, while operating income improved to $2.1 million from $0.9 million. Net income was unchanged year over year at $0.5 million.

GRAFAPEX Revenue and Adoption Continue to Build

GRAFAPEX generated $4.9 million in product-level net revenue during the quarter, its strongest quarterly performance to date, Chief Executive Officer Ken d'Entremont said. The company said GRAFAPEX revenue exceeded the $3.2 million it invested in product-level personnel and infrastructure during the same period, making the product accretive to quarterly operating cash flows before working-capital changes.

Chief Financial Officer Brendon Buschman said underlying patient demand for GRAFAPEX totaled $4.8 million, up 23% from $3.9 million in the fourth quarter of fiscal 2026 and 118% from $2.2 million in the prior-year first quarter.

Medexus reiterated its expectation for GRAFAPEX to generate $30 million to $32 million in product-level net revenue for fiscal 2027. Management also maintained its expectation that the product can reach annual net revenue of approximately $100 million to $175 million within five years of commercial launch.

As of June 30, wholesaler data showed that 75 healthcare institutions had ordered GRAFAPEX for use in their procedures, including 54 institutions that had placed repeat orders. D'Entremont said most revenue was coming from repeat orders as hospitals broaden adoption following their initial experience with the product.

The company said growth is increasingly being driven by adult patients, who represent about 85% of the market. Initial uptake had been strong in pediatrics, including some off-label use, but management said most of the current adult utilization is on-label, particularly in acute myeloid leukemia and myelodysplastic syndromes.

D'Entremont said pricing has been strong, with the company receiving its intended price broadly and doing little discounting. He added that the key indicator for the longer-term revenue target is whether hospitals adopt GRAFAPEX as a standard of care. The company has previously described its five-year sales range as representing 29% to 42% market share, and management said some hospitals have already reached that level of adoption.

Management acknowledged that the summer period has historically been a more challenging period for demand. However, d'Entremont said July was the company’s second-best month for GRAFAPEX, compared with a notably soft July in the prior year, while June was its strongest month to date.

Portfolio Performance and Margins

The $4 million year-over-year increase in total revenue was driven primarily by higher GRAFAPEX and IXINITY sales, Buschman said. Gross profit increased to $15.9 million from $13.8 million, while reported gross margin was 55.6%, compared with 56.0% a year earlier. Adjusted gross margin was 63.8%, down from 65.5%.

The year-earlier period included a one-time positive contribution from royalty revenue related to Gleolan, which Medexus returned to its licensor in March 2025. The company received royalty revenue through June 30, 2025, creating a difficult comparison, Buschman said. Excluding that prior-year item, gross margin and adjusted gross margin would have increased in the latest quarter, according to the company.

Selling, general and administrative expenses rose to $13 million from $12.2 million. Buschman said the adjusted EBITDA increase reflected GRAFAPEX revenue exceeding its product investment, along with higher IXINITY revenue, partly offset by the prior-year Gleolan royalty contribution.

IXINITY had a strong quarter, including a 12% increase in demand compared with the prior-year period, although Buschman said it remained unclear how much of the gain would prove durable versus reflecting the timing of patient prescription fills.

In Canada, Rupall sales benefited sequentially from allergy-season demand, which management said was somewhat stronger due to forest fires. Following generic competition that began in January 2025, Rupall had lost roughly 60% to two-thirds of its unit volume, Buschman said, but that decline has stabilized and the pace of further share loss has slowed.

Balance Sheet, Tariffs and Business Development

Cash used in operating activities totaled $0.7 million, compared with $3.9 million of cash provided by operating activities in the prior-year quarter. Buschman attributed the change primarily to the settlement of year-end payables and the timing of working-capital items.

Net debt stood at $20.9 million as of June 30, up from $15.7 million at March 31. Net debt to adjusted EBITDA was 1.18 times. Buschman said Medexus expects to generate meaningful operating cash flow during fiscal 2027 as GRAFAPEX scales and its established products continue to perform.

On potential tariffs, Buschman said Medexus expects the 15% tariff negotiated between the European Union and the U.S. to apply to Rasuvo, which is imported from Germany. GRAFAPEX could also be subject to the tariff, though the company sees potential for an orphan-drug carve-out. Management said the expected effect on overall margins is not material and it does not anticipate tariff-specific price increases.

Medexus also said an abbreviated new drug application filer related to Rasuvo is expected to be subject to a 30-month stay. D'Entremont said the company expects Rasuvo demand to continue along its established trend after the product received a one-time benefit from a competitor’s exit.

UM171 Adds to Transplant Strategy

In June, Medexus signed agreements for exclusive Canadian commercialization rights to UM171 Cell Therapy, an investigational product that received conditional marketing authorization in Europe under the name Zemcelpro. Management views UM171 as complementary to Trecondyv, Medexus’s Canadian brand for treosulfan, and as a strategic fit with its focus on allogeneic hematopoietic stem cell transplantation, or Allo-HSCT.

The next step is discussion with Health Canada regarding the regulatory path forward. D'Entremont said the company has requested a meeting and expects it could occur in the fall. He said Medexus is optimistic that the Canadian development and significant unmet medical need could support an expedited route, though he cautioned there is no guarantee until discussions with the regulator take place.

Looking ahead, d'Entremont said the company expects its business-development efforts to remain focused on stem cell transplantation and adjacent areas, building on the commercial platform created by GRAFAPEX.

About Medexus Pharmaceuticals (TSE:MDP)

Medexus is a leading specialty pharmaceutical company with a strong North American commercial platform and a growing portfolio of innovative and rare disease treatment solutions. Medexus's current focus is on the therapeutic areas of hematology and hematology-oncology and rheumatology and allergy.

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